Introduction to AI Startups in India: The State of the Industry

Is India ready to lead the world in AI innovation, or is it still playing catch-up? After analyzing everything across the internet and gathering real-world insights, the Bhussan.com team shares this friendly, helpful article on AI startups in India.

The AI ​​revolution is no longer just a buzzword – it is shaping the future of industries, economies, and societies worldwide. Traditionally known for IT outsourcing, India is now emerging as a key player in the global artificial intelligence (AI) ecosystem. But what does the AI ​​startup landscape look like in India? Is the country equipped with the right policies, resources, and innovation to harness this trillion-dollar potential?

Let’s dive deep into India’s journey with AI startups, explore the initiatives driving growth, and look at what’s needed to sustain and propel the nation’s AI ambitions.

AI Startups in India: The Growing Potential

Artificial intelligence is expected to contribute a whopping $15.7 trillion to the global economy by 2030. But as Prime Minister Narendra Modi pointed out during the ‘Startup Mahakumbh, 2024’, it’s not just about India’s potential; it’s also about not missing out on the opportunity to harness it.

Tech leaders like Sundar Pichai (CEO of Google) and Jensen Huang (CEO of Nvidia) have recognized India’s growing AI potential. The growing demand for AI solutions in sectors like healthcare, agriculture, and education presents a huge opportunity for India to not only participate in the AI ​​revolution but also to lead it.

But how does India stack up against global leaders in AI investment?

The Journey So Far: India’s AI Growth Story

India’s AI ecosystem is rapidly evolving, with AI investments and startups making significant progress. According to Stanford University’s AI Index Report, 2024, India ranks 7th globally in terms of total private AI investment between 2013 and 2023, totaling $9.85 billion. While the United States leads with $335.2 billion, India is gradually closing the gap.

From just 500 startups in 2016, India now has 1,54,719 startups, of which 2,915 are AI-focused, collectively generating around 24,000 jobs. The country’s AI market is valued at $7-10 billion and is expected to grow at a robust CAGR of 25-35% by 2027.

What’s driving this growth?

Government Policies and Initiatives Supporting AI Startups in India

India’s AI strategy is multi-faceted, aiming to develop AI startups by fostering innovation, enabling data ecosystems, and ensuring ethical AI deployment. Key initiatives, such as the National Strategy for AI, focus on crucial sectors like healthcare, agriculture, smart mobility, and education. These initiatives are designed to fuel research, workforce skilling, and adoption, creating a nurturing environment for AI-driven startups.

NITI Aayog’s Principles for Responsible AI ensure ethical AI development by defining key principles of transparency, fairness, inclusivity, and security. These measures are crucial for fostering trust and encouraging startups to build solutions that align with legal and moral standards.

Additionally, the IndiaAI Mission plays a pivotal role by providing infrastructure, funding, and policy support to AI startups. The mission’s focus on deep tech startups has seen an allocation of INR 2,000 crore for 2025-2026 to develop AI models, GPUs, and research labs across the country.

Indigenous AI Models: A Glimpse into India’s AI Future

India’s indigenous AI models are paving the way for AI startups to thrive. Take BharatGen, the world’s first government-funded multimodal Large Language Model (LLM). It aims to democratize AI access, reduce dependency on foreign tech, and provide India-centric datasets to startups. With projects like Bhashini (AI-driven language translation) and Krutrim AI Labs (AI research and development), India is setting the stage for a strong, localized AI ecosystem.

These initiatives enable Indian startups to access cutting-edge technologies, reducing the barriers typically faced by early-stage AI ventures. With innovations like Krutrim-1 (India’s first LLM), AI startups are finding an enriched environment to develop and scale their solutions.

Boosting India’s Computing Capabilities for AI Innovation

AI is computationally intensive, and India is making significant strides to strengthen its computational infrastructure. Through the National Quantum Mission, India is developing quantum computing technologies and enhancing its semiconductor capabilities. These advances are crucial for high-performance computing, secure communications, and AI model development.

India’s push toward quantum technologies will significantly impact AI-driven applications, especially in sectors that require intense computational power like healthcare, finance, and defense. By leveraging quantum computing, AI startups can access faster processing speeds, allowing for more efficient AI model training and real-time data analysis.

The Road Ahead: What’s Needed to Propel India’s AI Ecosystem?

While India has made impressive strides, much more needs to be done to build a globally competitive AI ecosystem. Here are the key areas that need attention:

• AI Talent: The demand for AI talent is soaring, but India faces a skill gap. Investing in AI-specific education and training programs can help bridge this gap.

• Regulatory Framework: Establishing a dedicated AI regulatory body would help address ethical concerns like bias, data privacy, and misuse, ensuring that AI innovation is both responsible and sustainable.

• AI Infrastructure: Expanding supercomputing resources and fostering public-private partnerships can enable AI startups to access the computational power they need to scale AI solutions.

Conclusion: India’s AI Startup Future Looks Bright—But It Needs Action

India is poised to become a global leader in AI, thanks to its rapidly growing startup ecosystem, innovative policies, and indigenous AI models. However, to sustain and accelerate this growth, the country must focus on strengthening its talent pool, regulatory framework, and computational infrastructure.

The IndiaAI Mission, coupled with government initiatives and private investment, will play a crucial role in ensuring that Indian AI startups remain at the forefront of global innovation.

As India continues to embrace AI, the world will be watching closely. The question is, will India seize this opportunity to not only participate in the AI revolution but also lead it?

Frequently Asked Questions (FAQs)

1. What is the current state of AI startups in India?

   • India has a rapidly growing AI startup ecosystem, with over 7,100 AI startups that have collectively raised $23 billion in funding.

2. How is the Indian government supporting AI startups?

   • The government has launched initiatives like the IndiaAI Mission, the National Strategy for AI, and funding programs to help AI startups innovate and scale.

3. What are the major AI innovations happening in India?

   • BharatGen, Bhashini, and Krutrim AI Labs are some of the major AI innovations helping startups with AI models tailored to India’s needs.

4. How is India addressing AI talent shortages?

   • India is investing in AI-specific education, workforce training, and research programs to bridge the skill gap in AI fields.

5. What role will quantum computing play in India’s AI future?

   • Quantum computing will provide the high computational power needed for AI model development, especially in sectors like healthcare and finance.

AI Startups in India: The Investment Landscape

AI startups in India are catching the eye of global investors. According to Tracxn, India’s AI sector includes over 7,100 startups, which have collectively raised $23 billion in equity funding. Companies like Sarvam AI are leading the charge, with their groundbreaking work in developing indigenous AI LLMs. Backed by investors like Lightspeed and Khosla Ventures, Sarvam is working to build AI models that cater to India’s linguistic and cultural diversity.

Vivek Raghavan, Co-founder of Sarvam, puts it perfectly: “Our goal is to build multi-modal, multi-scale foundation models from scratch. For citizens, this means interacting with AI that feels familiar, not foreign. For enterprises, this means unlocking intelligence without sending their data beyond borders.”

1. IndiaAI Mission by the Ministry of Electronics and IT

• URL: https://indiaai.gov.in

2. NITI Aayog’s National Strategy for Artificial Intelligence

• URL: https://www.niti.gov.in/national-strategy-ai